Real estate investing has many things to offer in the world of business. There can be various benefits of investing in really anything in life that is long-term, but real estate in actuality can offer a lot of upside to your business equity. Here are the top 5 benefits of real estate investing.
1. Equity Growth
Equity growth can be beneficial when you pay the mortgage and as long as your property appreciates in value. Equity is a truly valuable asset. You can withdraw from it someday if you need to, pass the wealth on to someone or, you can even borrow against it to secure an additional property.
The good thing about appreciation is that a rental property is usually an appreciating asset. While it’s true that most properties are subject to have peaks and dips in the market, property value has always recovered eventually and it is consistently increasing.
3. Cash Flow
Although the benefits of long-term appreciation and equity growth are valuable, that isn’t the only benefits of investing in real estate. Real estate’s true value comes from a combination of these rewards plus the immediate valuable with the currency you’ll get each month in the form of rental income.
4. Tax Benefits
Owning or managing rental property can be quite beneficial as well. One of the benefits is having many tax breaks. Understanding which deductions you qualify for can considerably reduce your salary income, meaning less tax to pay. If you consult your tax advisor for the following, then you can get many tax breaks:
• Property management fees: These costs are tax-deductible.
• Maintenance and repairs: Repairs can also be deductibles. Among these include; painting, some plumbing, fixing drywall, doors/locks, broken windows and more.
• Advertising: Fees for advertising your property can also be partially or fully written off.
• Depreciation: You can deduct a certain percentage of your lost value depreciation. Land is not a depreciating asset and not included in this deduction.
• Travel: Mileage from traveling from property to property can also be deducted. The standard mileage rate is 53.5 cents/mile.
• Interest: Mortgage a HUGE deductible as well for most investors or landlords. Interest on credit cards used for the rental may also be deductible.
• Insurance: Insurance premiums for your property can be a tax break. This includes policies for fire, theft, flood and liability insurance and even various protection plans.
5. Other Benefits
One of the most overlooked benefits of real estate investing is also leverage. The purpose of getting others to help you invest in property can be very impactful for you and your business. Banks can be harder to approve you for a loan with more stipulations than needed. Because of this, your investments can go further, and your returns could be higher. Your cash flow and appreciation returns from multiple assets, growing your wealth at a much faster rate.
Finally, real estate investing gives you the advantage of owning asset that puts you in charge. Although in stocks or shares you are dependent on the market, with real estate, you’ll always have something with more value. A necessity that people will always need homes.